<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
|X| Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act For the Fiscal Year Ended JULY 31, 2000
|_| Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from ____ to ____
Commission File Number 0-3338
------------------------------
REGENT GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware 22-1558317
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
720 Milton Road, Suite J-3, Rye, New York 10580
(914) 921-6389
(Address and telephone number, including area code, of registrant's principal
executive office)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock,
$.062/3 par value
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 month (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
_____ _____
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-B is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. |X|
Revenues for the issuer's most recent fiscal year were $1,432,820.
The aggregate market value of the voting stock held by non-affiliates of the
registrant computed by reference to the average bid and asked price of such
stock as of October 20, 2000 was $1,432,820.
At October 20, 2000, 5,420,231 shares of registrant's Common Stock were
outstanding.
Transitional Small Business Disclosure Format (check one):
Yes No X
----- -----
Documents incorporated by reference: None.
<PAGE>
TABLE OF CONTENTS
Item Page
Cautionary Statement Pursuant to "Safe Harbor" Provisions of the
Private Securities Litigation Reform Act of 1995...............................1
PART I
Item 1. Description of Business.............................................2
(a) Business Development.........................................2
(b) Business of the Issuer.......................................3
Item 2. Description of Property.............................................3
Item 3. Legal Proceedings...................................................3
Item 4. Submission of Matters to a Vote of Security Holders.................3
PART II
Item 5. Market for Common Equity and Related
Stockholder Matters.................................................3
Item 6. Management's Discussion and Analysis
of Financial Condition and Results of Operations....................4
Item 7. Financial Statements.............................................F-1*
Item 8. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure............................................6
PART III
Item 9. Directors, Executive Officers, Promoters and Control
Persons; Compliance with Section 16(a)
of the Exchange Act.................................................6
Item 10. Executive Compensation..............................................7
Item 11. Security Ownership of Certain Beneficial Owners
and Management......................................................8
Item 12. Certain Relationships and Related Transactions......................9
Item 13. Exhibits, List and Reports on Form 8-K.............................10
Signatures....................................................................11
*Page F-1 follows Page 11.
i
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CAUTIONARY STATEMENT PURSUANT TO "SAFE HARBOR" PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995
Except for historical information, the Company's reports to the
Securities and Exchange Commission on Form 10-KSB and Form 10-QSB and periodic
press releases, as well as other public documents and statements, contain
"forward-looking statements" within the meaning of the federal securities laws.
Forward-looking statements are subject to risks and uncertainties that could
cause actual results to differ materially from those expressed or implied by the
statements, regarding, among others the Company's ability to consummate the
merger with Playa Minerals & Energy Inc. and other risks and uncertainties
identified in the Company's reports to the Securities and Exchange Commission,
periodic press releases, or other public documents or statements.
Readers are cautioned not to place undue reliance on forward-looking
statements. The Company undertakes no obligation to republish or revise
forward-looking statements to reflect events or circumstances after the date
hereof or to reflect the occurrences of unanticipated events.
1
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PART I
Item 1. Description of Business.
(a) Business Development
Regent Group, Inc. ("Regent" or the "Company"), formerly known as NMC
Corp., was incorporated in the State of Delaware on November 28, 1967, changed
its name to International Madison Holdings Corp. in August 1997. In September
1997, International Madison Holdings Corp. changed its name to Regent Group,
Inc.
In February 1997, Regent sold its only operating division, Krystal
Fountain Water Company Limited.
In September 1997, Regent acquired eighty (80%) percent of the capital
stock of United States Lead Testing and Removal Service, Inc. ("U.S. Lead").
During the year ended July 31, 1998, U.S. Lead was the Company's only operating
division. On April 30, 1998, the Company rescinded the agreement with U.S. Lead.
On June 1, 1998, the Company executed a stock purchase agreement
between Regent and Edenfield Enterprises, Inc. to acquire a 450-acre property in
Thomaston, Georgia, known as Hickory Ridge Golf Course and Residential
Community. After due diligence by the Company, Regent terminated the stock
purchase agreement and the acquisition was never consummated.
In October 1998, the Company announced it was acquiring one hundred
(100%) percent of the issued and outstanding stock of New Century Ventures, Inc.
for two million (2,000,000) shares of Regent common stock. On May 20, 1999, the
agreement was rescinded by mutual consent of the parties.
On July 14, 1999, Regent acquired Stock Siren.com, LLC ("Siren"), a New
York limited liability company. Siren is an Internet-based advertising and
publishing entity that owns and operates several financially oriented web sites.
Regent issued 11,550,000 shares of its restricted common stock, comprising
approximately 83.4% of its voting shares, in exchange for all of the issued
outstanding membership interests of Siren. The acquisition occurred pursuant to
a Securities Purchase Agreement (the "Purchase Agreement"), dated July 7, 1999,
among Regent and the holders of all of the outstanding membership interests of
Siren.
Pursuant to the Purchase Agreement, all of the members of Regent's
Board of Directors who held office immediately prior to the closing of the
Purchase Agreement resigned, and the members of Siren designated four persons to
Regent's Board of Directors: Anthony L. Escamilla, Robert M. Long, Eric J.
Miller and Anthony C. Vickerson. Regent designated F. Albert Landwehr, Jr. as
the fifth member of the Board of Directors pursuant to the Purchase Agreement.
In addition, Messrs. Escamilla, Long, Miller and Vickerson became executive
officers of Regent.
In connection with the acquisition of Siren, Regent transferred its
assets, subject to its liabilities, to RH Holdings, LLC ("RH"), a New York
limited liability company. The sole member of RH is Marvin E. Greenfield. Mr.
Greenfield is a former director and the former President and Chief Executive
Officer of Regent and remains a principal stockholder of Regent. In connection
with this transfer of assets to Mr. Greenfield, the holders of all of Regent's
existing liabilities discharged Regent from those liabilities.
Siren is a wholly-owned subsidiary of Regent and is the Company's only
operating business, although Siren had insignificant operations during the most
recent fiscal year. The Company is investigating the possibility of selling the
web sites and Siren.
On April 3, 2000 the Company executed a definitive merger agreement
with Playa Minerals and Energy, Inc. ("Playa"), a company engaged in the
acquisition and development of proven oil and gas reserves located primarily in
the San Juan Basin and the Gulf Coast. Currently, Playa is developing two fields
it purchased and is in the process of purchasing two other packages of proven
oil and gas reserves.
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Under the terms of the agreement, Playa shareholders will receive 92%
of the equity of Regent. Current shareholders of Regent will retain 8% of the
Company. The merger is subject to due diligence by both Regent and Playa, the
approval of Playa's stockholders and other usual closing conditions.
The principal executive offices of the Company are located at 720
Milton Road, Suite J3, Rye, New York 10580 (tel. no. 914-921-3447). The
Company's common stock (the "Common Stock") is quoted on the NASD's OTC Bulletin
Board (the "Bulletin Board") under the trading symbol "RGII." Unless otherwise
indicated, the term "Company" includes the Company and its subsidiaries.
(b) Business of the Issuer
The Company currently has no material operations or source of revenue.
The Company's web sites are not actively maintained and the Company's only
business strategy at present is to consummate the merger with Playa.
Other than the executive officers, the Company has no employees.
Item 2. Description of Property.
The Company's office facilities are located in leased or rented space,
as further described below. The Company believes that its current facilities are
adequate for its present operations.
Rye, New York
The Company currently utilizes approximately 1,000 square feet of space
in the office of Redstone Partners, Inc., a company owned by Anthony Vickerson,
the Company's Chief Operating Officer. The Company is not being charged expenses
in connection with the use of this space. Currently, the Rye office functions as
the Company's headquarters.
Rhinebeck, New York
The Company currently utilizes approximately 100 square feet of space
in the office of LongView Partners, Inc., a company owned by Robert Long, the
Company's Chairman of the Board. The Company is not being charged expenses in
connection with the use of this space.
Item 3. Legal Proceedings.
In September 1997, the Company issued 280,000 shares of its Common
Stock to a consultant, which issuance was conditional upon the occurrence of
certain events. The shares were issued and delivered in escrow and, the Company
believes, wrongfully delivered by the escrow agent to the consultant. The
Company has fully and finally settled any disputes arising from the foregoing
and 190,000 shares will be returned for cancellation.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
PART II
Item 5. Market For Common Equity and Related
Stockholder Matters.
Regent's Common Stock is traded in the over-the-counter market on the
NASD OTC Bulletin Board. The following table sets forth, for the periods
indicated, the high and low closing bid and asked prices for one share of Common
Stock. These prices were obtained from the National Quotation Bureau, LLC. The
quotations represent prices between dealers and do not include retail markups,
markdowns or commissions and do not necessarily represent actual transactions.
3
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The market for the Common Stock has been sporadic and there have been
long periods during which there were few, if any, transactions in the Common
Stock and no reported quotations. Accordingly, reliance should not be placed on
the quotes listed below, as the trades and depth of the market may be limited,
and therefore, such quotes may not be a true indication of the current market
value of the Company's Common Stock.
<TABLE>
<CAPTION>
Fiscal Year Ended Bid Prices Ask Prices
July 31, 2000 High Low High Low
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
August 1, 1999 through
October 31, 1999 1.6875 .40625 1.875 .46875
November 1, 1999 through
January 31, 2000 .4375 .23 .46875 .25
February 1, 2000 through
April 30, 2000 .78125 .22 .90625 .24
May 1, 2000 through
July 31, 2000 .625 .375 .71875 .5625
Fiscal Year Ended
July 31, 1999
August 1, 1998 through
October 31, 1998 2.125 .71875 2.25 .75
November 1, 1998 through
January 31, 1999 .77 .45 .80 .80
February 1, 1999 through
April 30, 1999 1.6875 .28 1.75 .35
May 1, 1999 through
July 31, 1999 2.125 1.125 2.375 1.375
</TABLE>
As of October 20, 2000, there were approximately 201 holders of record
of the Company's Common Stock. In addition, there were approximately 10 holders
of record of the Company's Series B Convertible Preferred Stock, $1.00 par
value, and 67 holders of record of the Company's Series C Preferred Stock, $1.00
par value.
No cash or stock dividends have been declared or paid during the last
two fiscal years. No cash dividends may be declared or paid on the Company's
Common Stock if, and as long as, the Series B Preferred Stock is outstanding or
there are unpaid dividends on outstanding shares of Series C Preferred Stock. No
dividends may be declared on the Series C Preferred Stock if, and as long as,
the Series B Preferred Stock is outstanding. Accordingly, it is unlikely the
Company will declare any cash dividends in the foreseeable future.
Recent Sales of Unregistered Securities.
From August through October 2000, the Company sold an aggregate of
160,000 shares of Common Stock at a price of $.25 per share to three individual
accredited investors. These securities were offered and issued without an
underwriter in reliance upon the exemption from the registration requirements of
the Securities Act of 1933, as amended (the "Securities Act"), provided by Rule
506 of Regulation D promulgated under the Securities Act.
Item 6. Management's Discussion and Analysis
of Financial Condition and Results of Operations.
The Company currently has no material operations or source of revenue.
The Company's web sites are not actively maintained and the Company's only
business strategy at present is to consummate the merger with Playa.
4
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The Company expects that it will continue to generate insignificant revenues
unless it consummates the merger with Playa.
Liquidity and Capital Resources
On April 3, 2000 the Company executed a definitive merger agreement
with Playa Minerals and Energy, Inc., a company engaged in the acquisition and
development of proven oil and gas reserves located primarily in the San Juan
Basin and the Gulf Coast. Currently, Playa is developing two fields it purchased
and is in the process of purchasing two other packages of proven oil and gas
reserves.
Under the terms of the agreement, Playa shareholders will receive 92%
of the equity of Regent. Current shareholders of Regent will retain 8% of the
Company, and the Company will receive $265,000 in cash. As of July 31, 2000 the
Company received $200,000 as a non-refundable deposit. The merger is subject to
due diligence by both Regent and Playa.
There is substantial doubt about the Company's ability to continue as a
going concern. As of July 31, 2000, the Company's current liabilities exceeded
its current assets, exclusive of the restricted marketable securities held by
the Company. The Company is liable on a note with an outstanding principal
balance of $90,000, due on December 31, 2000, which the Company likely will be
unable to repay.
If the Company can reasonably liquidate restricted securities
previously received by the Company in lieu of cash compensation for services
rendered, the Company believes it will have sufficient cash to fund its
operations through the consummation of the merger with Playa, which the Company
expects to occur no later than December 31, 2000. Certain of the restricted
securities held by the Company are subject to a claim which the Company believes
has no merit.
If the merger is not completed by approximately December 31, 2000, the
Company's ability to continue as a going concern will depend upon its ability to
obtain needed working capital through additional equity and/or debt financing or
to complete a merger with another entity. There are no assurances that the
restricted securities held by the Company can be liquidated or that such
alternative financing or an alternative merger can be completed on terms that
are acceptable to the Company or at all.
Results of Operations
The Company is investigating the possibility of selling the web sites
or Siren. The operating results of Siren have been included in the statement of
operations from the date of acquisition. Siren is currently the Company's only
operating entity. The Company has determined that the measurement value of the
goodwill resulting from the acquisition of Siren has been impaired and that a
more realistic valuation would be the writedown of goodwill to $0. In connection
with the impairment with respect to the measurement of goodwill, approximately
$5.6 million of goodwill was written off through a charge to operations during
the fourth quarter of the fiscal year ended July 31, 2000.
2000 Compared to 1999
SALES. Sales increased from $3,750 for the year ended July 31, 1999 to
$154,850 for the year ended July 31, 2000. The Company attributes the increase
to the commencement of operations of Siren in July 1999, prior to which the
Company had insignificant operations. The Company presently has no material
operations other than in connection with consummating the merger with Playa.
COST OF SALES. Cost of sales increased from $1,000 for the year ended
July 31, 1999 to $15,725 for the year ended July 31, 2000. The Company
attributes the increase to the reasons described above.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased from $760,701 year ended July 31, 1999 to
$808,889 for the year ended July 31, 2000. The Company attributes the increase
primarily to a consulting expense charged to operations for the year ended July
31, 2000.
INTEREST EXPENSE. Interest expense decreased from $202,240 for the year
ended July 31, 1999 to $10,748 for the year ended July 31, 2000. The Company
attributes the decrease to the transfer of certain interest-bearing liabilities
to RH Holdings, LLC in connection with the acquisition of Siren in July 1999.
5
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1999 Compared to 1998
SALES. Sales increased from $-0- for the year ended July 31, 1998 to
$3,750 for the year ended July 31, 1999. During the year ended July 31, 1998,
the Company rescinded the transaction with U.S. Lead and all revenue from U.S.
Lead is included in the loss from discontinued operations. Siren commenced
operations in July 1999.
COST OF SALES. Cost of sales increased from $-0- for the year ended
July 31, 1998 to $1,000 for the year ended July 31, 1999. The Company attributes
the increase to the reasons described above. All cost of sales from U.S. Lead
for the year ended July 31, 1998 have been included in the loss from
discontinued operations.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses decreased from $1,426,645 for the year ended July 31,
1998 to $760,701 for the year ended July 31, 1999. The Company attributes the
decrease primarily to decreases in professional fees and consulting fees in
pursuing new acquisitions.
INTEREST EXPENSE. Interest expense decreased from $428,535 for the year
ended July 31, 1998 to $202,240 for the year ended July 31, 1999. During the
year ended July 31, 1998, the Company issued stock as additional consideration
as per various loan agreements. The amounts were recorded as additional interest
expense.
ACCOUNTING STANDARDS. For information regarding certain promulgated
accounting standards, see Note 1 of the Notes to Consolidated Financial
Statements.
Item 7. Financial Statements.
The financial statements follow Item 13 of this report.
Item 8. Changes in and Disagreements With Accountants on Accounting
and Financial Disclosure.
None.
PART III
Item 9. Directors, Executive Officers, Promoters and Control
Persons; Compliance With Section 16(a)
of the Exchange Act.
The current executive officers, directors and significant employees of
the Company are as follows:
Name Age Position
Robert M. Long 41 Chairman of the Board
Anthony C. Vickerson 41 Chief Operating Officer, Director
F. Albert Landwehr, Jr. 44 Director
All directors hold office until the next annual meeting of stockholders
and the election and qualification of their successors. Vacancies on the Board
of Directors may be filled by the remaining directors until the next annual
stockholders' meeting. Officers serve at the discretion of the Board. The Board
currently has no committees.
Directors who are officers or employees of the Company will not be
compensated for service on the Board of Directors or any committee thereof.
Directors who are non-officers or non-employees may, at the Company's
discretion, receive nominal compensation to cover travel costs.
6
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Robert M. Long, Chairman of the Board.
Mr. Long is a Founder of Siren, the Company's subsidiary. Mr. Long is
the Founder and President of LongView Partners, Inc., an investment banking and
financial public relations firm, which he established in 1995. From 1983-1995,
Mr. Long co-managed a venture capital fund with assets in excess of $5 million
consisting primarily of the personal funds of one investor. He graduated in 1981
with a BA in Economics from the University of the South. In 1983, he earned a
Master of Business Administration degree from the College of William and Mary.
Anthony C. Vickerson, Chief Operating Officer and Director.
Mr. Vickerson is a Founder and was the President of Siren. He is also
the General Partner of Redstone Partners, LP, an exempt commodity pool, and has
served in that capacity since December 1997. From 1996 to 1997, Mr. Vickerson
served as a Senior Vice President of Roan Capital Partners, LP Investment
Bankers. From 1995 to 1996, Mr. Vickerson served as Senior Vice President and
Sales Manager at Shamus Capital Group Investment Bankers. From 1990 to 1995, Mr.
Vickerson served in various capacities at several brokerage firms, including
Common Wealth Associates Investment Bankers, and GKN Securities, Inc. He earned
a degree in Criminal Justice from Mercy College.
F. Albert Landwehr, Jr., Director.
From October 1998 through the present, Mr. Landwehr has been a
principal and is a Founder of Sentinel Financial Corp. From March 1996 through
September 1998, he was managing director and president of affiliated companies
at Select Capital Markets of Atlanta, Georgia. From December 1992 until February
1996, he was employed by Lieberman & Lieberman of Memphis, Tennessee.
Regent has not entered into employment agreements with any of its
directors, officers or key consultants and affiliates but may, at its
discretion, enter into such agreements in the future.
Section 16(a) Beneficial Ownership Reporting Compliance
To the Company's knowledge, based solely on a review of such materials
as are required by the Securities and Exchange Commission, no officer, director
or beneficial holder of more than ten percent of the Company's issued and
outstanding shares of Common Stock failed to file in a timely manner with the
Securities and Exchange Commission any form or report required to be so filed
pursuant to Section 16(a) of the Securities Exchange Act of 1934, as amended,
during the fiscal year ended July 31, 2000.
Item 10. Executive Compensation.
The following table sets forth the compensation awarded to, earned by
or paid to the Company's Chief Executive Officer and each other executive
officer of the Company whose salary and bonus exceeded $100,000 for the fiscal
years ended July 31, 2000, 1999 and 1998 (collectively, the "Named Executive
Officers").
7
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<TABLE>
<CAPTION>
Summary Compensation Table
Annual Compensation Long-Term
---------------------------- Compensation
Name and Principal Position Year Salary ($) Bonus ($) Awards
------------------------------ ------- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Robert M. Long 2000 -- -- --
Chairman of the Board 1999 -- -- --
1998 -- -- --
Anthony L. Escamilla (1)
Chief Executive Officer, 2000 -- -- --
Chief Financial Officer, 1999 5,000 -- --
Secretary and Treasurer 1998 -- -- --
Marvin E. Greenfield (2) 2000 -- -- --
President and Chief 1999 240,385 -- --
Executive Officer 1998 250,000 -- --
</TABLE>
------------------------------ ------- --------------------------
(1) Mr. Escamilla's services were provided to the Company pursuant to an
oral agreement between Regent and Matrix Venture Group, Inc., a company
of which Mr. Escamilla is the principal stockholder.
(2) Mr. Greenfield and the Company entered into an employment agreement
through July 31, 2001. The agreement provided for a base salary of
$250,000 per year. Upon termination of Mr. Greenfield's employment by
the Company except for cause or death or disability, he is to receive
the sum of $750,000. Mr. Greenfield resigned from the Company on July
14, 1999 and all agreements were terminated.
Item 11. Security Ownership of Certain Beneficial Owners
and Management.
The following table sets forth as of October 20, 2000 the beneficial
ownership of Common Stock of the Company, the Company's only class of voting
securities, by (i) each person who is known to be the beneficial owner of more
than 5% of the Company's Common Stock, (ii) each of the Company's directors and
Named Executive Officers and (iii) all directors and officers as a group. To
Regent's knowledge, each person named has the sole voting and investment power
with respect to the securities listed as owned by him or it.
Only the common stock, which is also known as "Class A Common Stock",
has voting rights. An owner of Series B Convertible Stock has the right to
convert each share of such stock into one share of Class A Common Stock. Until
such conversion, the shares of Series B Preferred Stock may not be voted. None
of the classes of stock vote jointly.
<TABLE>
<CAPTION>
Name and Address of Amount and Nature of Percent of
Beneficial Owner (1) Beneficial Ownership (2) Class (2)
--------------------------- ------------------------ ------------
<S> <C> <C>
F. Albert Landwehr, Jr........................... - -
LongView Partners, Inc. (3)...................... 173,423 3.20%
Redstone Partners, Inc. (4)...................... 260,135 4.80%
All Directors and Officers as
a Group (3 persons).......................... 433,558 8.00%
Marvin E. Greenfield (5) (6)..................... 1,070,020 19.74%
Helen Ong Hai.................................... 754,392 13.92%
---------------------------
</TABLE>
8
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(1) Unless otherwise noted, address is c/o the Company, 720 Milton Road,
Suite J-3, Rye, NY 10580.
(2) Calculated based on 5,420,231 shares issued and outstanding as of
October 20, 2000. Includes shares currently outstanding and, as to each
person named, those shares which are not outstanding but which such
person has the right to acquire within 60 days.
(3) Primarily owned and controlled by Robert M. Long, Chairman of the
Board.
(4) Owned and controlled by Anthony C. Vickerson, Chief Operating Officer
and a Director.
(5) Includes 254,375 shares held by Mr. Greenfield's wife, issued in
connection with a financing arrangement, 3,345 shares held of record by
National BMF Corp. ("NBMF"), and 25,000 shares held of record by
Profitmargin Limited ("Profitmargin"), a company located in London,
England. Mr. Greenfield's daughter and a trust for which she is sole
beneficiary own the outstanding common stock of NBMF. Mr. Greenfield's
wife is the sole trustee of the trust. Mr. Greenfield is also the
President of NBMF. Mr. Greenfield's wife and NBMF own the outstanding
equity interest in Profitmargin equally.
(6) Includes (a) 200,000 shares issuable at a price of $.06 2/3 per share
upon the exercise of options, which are exercisable until October 30,
2006, (b) 200,000 shares issuable at a price of $1.00 per share upon
the exercise of options, which are exercisable until October 30, 2006,
and (c) 75,000 shares issuable at a price of $.06 2/3 per share upon
the exercise of options, which are exercisable until October 30, 2007.
Item 12. Certain Relationships and Related Transactions.
In July 1999, the Company issued a convertible note to Robert Platek, a
principal shareholder of the Company, in connection with a $200,000 loan by Mr.
Platek to the Company. The note is convertible into shares of Regent Common
Stock at an exercise price of $1.00 per share. The Company recorded interest
expense in the amount of $5,081 and $333 for the years ended July 31, 2000, and
July 31, 1999, respectively, in connection with this note. In December 1999, the
note was transferred to an unaffiliated third party. As of the date of this
report, the note has an outstanding principal balance of $90,000 and is due on
December 31, 2000.
In June 2000, each of the Company's stockholders who was a founding
member of Siren contributed to the Company 75% of the shares of the Company's
Common Stock which each such stockholder received in connection with the
acquisition of Siren by the Company. In connection with the foregoing, the
Company received and cancelled an aggregate of 7,620,346 shares of its Common
Stock.
9
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Item 13. Exhibits, List and Reports on Form 8-K.
Exhibit Description
3.1 Certificate of Incorporation and Bylaws of the Company. (1)
10.1 Securities Purchase Agreement dated July 7, 1999 among Regent Group,
Inc. and the members of Stock Siren.com, LLC. (2)
10.2 Distributor Agreement dated June 11, 1999, between Stock Siren.com,
LLC and Media General Financial Services, Inc. (3)
10.3 Letter Agreement dated July 29, 1999 between Regent Group, Inc. and
Investorlinks.com, LLC. (3)
10.4 Redemption and Resignation Agreement dated October 8, 1999 among
Regent Group, Inc., Stock Siren.com, LLC, Eric J. Miller and SRU,
Inc. (3)
10.5 Agreement and Plan of Merger by and between Playa Minerals & Energy,
Inc. and Regent Group, Inc. dated March 31, 2000
10.6 Restated Amendment to Agreement and Plan of Merger by and between
Playa Minerals & Energy, Inc. and Regent Group, Inc., dated September
28, 2000.
21.1 Subsidiaries of the Small Business Issuer. (3)
27.1 Financial Data Schedule.
---------------------------
(1) Incorporated by reference to Registrant's Annual Report on
Form 10-K for the year ended July 31, 1981.
(2) Incorporated by reference to Registrant's Current Report on
Form 8-K filed on July 28, 1999.
(3) Incorporated by reference to Registrant's Annual Report on
Form 10-K for the year ended July 31, 1999.
Reports on Form 8-K
The Registrant filed no Current Report on Form 8-K during the quarter
ended July 31, 2000.
10
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
REGENT GROUP INC.
By: /s/ Robert M. Long
---------------------------------------
Robert M. Long, Chairman of the Board
Date: November 6, 2000
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
/s/ Robert M. Long
---------------------------------- Date: November 6, 2000
Robert M. Long
Chairman of the Board
/s/ Anthony C. Vickerson
---------------------------------- Date: November 6, 2000
Anthony C. Vickerson
Chief Operating Officer
and Director
---------------------------------- Date:
F. Albert Landwehr, Jr.
Director
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Item 7. Financial Statements and Supplementary Data
Index to Financial Statements and Supplementary Financial Data
Page
Independent Auditors' Report F-1 - F-2
Financial Statements:
Consolidated Balance Sheets as of July 31,
2000 and 1999 F-3
Consolidated Statements of Operations, Years
Ended July 31, 2000, 1999 and 1998 F-4
Consolidated Statements of Stockholders'
(Deficiency) Equity, Years Ended July 31,
2000, 1999 and 1998 F-5
Consolidated Statements of Cash Flows, Years
Ended July 31, 2000, 1999 and 1998 F-6 - F-7
Notes to Consolidated Financial Statements F-8 - F-17
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
and Stockholders of
Regent Group Inc.
New York, New York
We have audited the consolidated balance sheets of Regent Group Inc.
and subsidiary, as of July 31, 2000 and 1999, and the related consolidated
statements of operations, stockholders' equity, and cash flows for each of the
three years in the period ended July 31, 2000. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements and schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements referred to
above present fairly, in all material respects, the financial position of Regent
Group Inc. and subsidiary at July 31, 2000 and 1999, and the results of their
operations and their cash flows for each of the three years in the period ended
July 31, 2000 in conformity with generally accepted accounting principles. Also,
in our opinion, such financial statement schedule, when considered in relation
to the basic consolidated financial statements taken as a whole, present fairly
in all material respects the information set forth therein.
F-1
<PAGE>
The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. As more fully
explained in Note 1 of Notes to Consolidated Financial Statements, the Company
needs to obtain additional financing and achieve a level of sales to support its
cost structure. These factors raise substantial doubt about the Company's
ability to continue as a going concern. Management's plans in regard to these
matters are also described in Note 1. The consolidated financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.
WIENER, GOODMAN & COMPANY, P.C.
Certified Public Accountants
Eatontown, New Jersey
September 22, 2000
F-2
<PAGE>
REGENT GROUP INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
July 31,
---------------------------------
2000 1999
------------ ------------
ASSETS
<S> <C> <C>
Current Assets:
Cash $ 551 $ 194,034
Marketable securities 375,500 -
Prepaid expensees and other current assets 8,593 -
------------ ------------
Total Current Assets 384,644 194,034
Goodwill - net - 17,087,037
------------ ------------
TOTAL ASSETS $ 384,644 $ 17,281,071
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Short-term debt $ 90,000 $ 200,000
Accounts payable 56,462 12,694
Accrued expenses 83,437 64,533
Unearned revenue - 3,750
------------ ------------
Total Current Liabilities 229,899 280,977
------------ ------------
Commitments and Contingent Liabilities
Stockholders' Equity:
Preferred stock, par value $1; authorized
500,000 shares (involuntary liquidation
value $777,912)
Convertible Series B, at redemption value;
issued and outstanding 65,141 shares 130,282 130,282
Cumulative Series C, par value $1;
issued and outstanding 64,763 shares 64,763 64,763
Common stock, par value $.06-2/3; authorized
20,000,000 shares; issued and outstanding
5,320,231 and 13,891,118 shares 354,800 926,538
Additional paid-in capital 16,822,589 27,192,151
Deficit (17,447,189) (11,313,640)
Cumulative other comprehensive income 229,500 -
------------ ------------
Total Stockholders' Equity 154,745 17,000,094
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 384,644 $ 17,281,071
============ ============
</TABLE>
See notes to consolidated financial statements.
F-3
<PAGE>
REGENT GROUP INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Years Ended
July 31,
------------------------------------------------------
2000 1999 1998
------------ ------------ ------------
<S> <C> <C> <C>
Revenues:
Sales $ 154,850 $ 3,750 $ -
Costs and Expenses:
Cost of sales 15,725 1,000 -
Selling, general and
administrative expenses 808,889 760,701 1,426,645
Amortization/write off of goodwill 5,653,037 237,320 -
Interest expense 10,748 202,240 428,535
------------ ------------ ------------
6,488,399 1,201,261 1,855,180
------------ ------------ ------------
Loss from operations (6,333,549) (1,197,511) (1,855,180)
Other income 200,000 - -
------------ ------------ ------------
Loss before provision for income taxes (6,133,549) (1,197,511) (1,855,180)
Provision from income taxes - - -
------------ ------------ ------------
Loss from continuing operations (6,133,549) (1,197,511) (1,855,180)
Discontinued operations (Note 6)
Loss from discontinued operations
with no tax benefit - - (1,115,210)
Gain on rescission - - 1,061,615
------------ ------------ ------------
Net loss $ (6,133,549) $ (1,197,511) $ (1,908,775)
============ ============ ============
Basic and diluted loss per share:
Loss from continuing operations $ (0.49) $ (0.41) $ (0.94)
Loss from discontinued operations - - (0.03)
------------ ------------ ------------
Net loss $ (0.49) $ (0.41) $ (0.97)
============ ============ ============
Weighted average number of common
share outstanding-basic and diluted 12,419,283 2,902,912 1,975,639
============ ============ ============
</TABLE>
See notes to consolidated financial statements.
F-4
<PAGE>
REGENT GROUP INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)
YEARS ENDED JULY 31, 2000, 1999 AND 1998
<TABLE>
<CAPTION>
Preferred Stock
------------------------
Convertible Cumulative Common Additional
Series B Series C Stock Paid-In
Amount Amount Amount Capital Deficit
---------- --------- ------------ ------------ -------------
<S> <C> <C> <C> <C> <C>
Balance, August 1, 1997 $ 130,282 $ 64,763 $ 99,682 $ 8,224,858 $ (8,207,354)
Issuance of common stock in lieu of
compensation (at $2.31 per share) 83 2,804
Issuance of common stock in lieu of
consulting services (at $2.25 to
$3.00 per share) 21,678 700,073
Exercise of warrants (at $1.00 per share) 14,673 205,327
Issuance of common stock in lieu of
interest (at $2.16 to $2.44 per share) 20,762 367,039
Net (loss) (1,908,775)
---------- --------- ------------ ------------ -------------
Comprehensive (loss)
Balance, July 31, 1998 130,282 64,763 156,878 9,500,101 (10,116,129)
Cancellation of common stock issued in
lieu of interest (at $2.25 per share) (2,918) (46,301)
Issuance of common stock in lieu of
interest (at $1.38 per share) 125 1,168
Issuance of common stock in lieu of
consulting services (at $1.44 per share) 2,068 42,572
Issuance of warrants in lieu of consulting 25,046
Issuance of common stock in connection
with the acquisition of Stock Siren.com 770,385 16,554,615
Transfer of assets and liabilities to
RH Holdings 1,114,950
Net (loss) (1,197,511)
---------- --------- ------------ ------------ -------------
Comprehensive loss
Balance, July 31, 1999 130,282 64,763 926,538 27,192,151 (11,313,640)
Issuance of warrants in lieu of
consulting 250,870
Issuance of common stock in lieu of
consulting (at $2.687 per share) 6,003 235,827
Acquisition of treasury stock
Retirement of treasury stock (69,464) 69,464
Retirement of common stock (508,277) (10,925,723)
Unrealized gain on marketable securities
Net (loss) (6,133,549)
---------- --------- ------------ ------------ -------------
Comprehensive loss
Balance, July 31, 2000 $ 130,282 $ 64,763 $ 354,800 $ 16,822,589 $ (17,447,189)
========== ========= ============ ============ =============
<CAPTION>
Cumulative
Other
Comprehensive Comprehensive Treasury
Income (loss) Income (loss) Stock Total
---------- ------------- --------- ------------
<S> <C> <C> <C> <C>
Balance, August 1, 1997 $ -- $ $ 312,231
Issuance of common stock in lieu of
compensation (at $2.31 per share) 2,887
Issuance of common stock in lieu of
consulting services (at $2.25 to
$3.00 per share) 721,751
Exercise of warrants (at $1.00 per share) 220,000
Issuance of common stock in lieu of
interest (at $2.16 to $2.44 per share) 387,801
Net (loss) $ (1,908,775) (1,908,775)
---------- ------------- --------- ------------
Comprehensive (loss) $ (1,908,775)
=============
Balance, July 31, 1998 -- -- (264,105)
Cancellation of common stock issued in
lieu of interest (at $2.25 per share) (49,219)
Issuance of common stock in lieu of
interest (at $1.38 per share) 1,293
Issuance of common stock in lieu of
consulting services (at $1.44 per share) 44,640
Issuance of warrants in lieu of consulting 25,046
Issuance of common stock in connection
with the acquisition of Stock Siren.com 17,325,000
Transfer of assets and liabilities to
RH Holdings 1,114,950
Net (loss) $ (1,197,511) (1,197,511)
---------- ------------- --------- ------------
Comprehensive loss $ (1,197,511)
=============
Balance, July 31, 1999 -- -- 17,000,094
Issuance of warrants in lieu of
consulting 250,870
Issuance of common stock in lieu of
consulting (at $2.687 per share) 241,830
Acquisition of treasury stock (10) (10)
Retirement of treasury stock 10 10
Retirement of common stock (11,434,000)
Unrealized gain on marketable securities 229,500 $ 229,500 229,500
Net (loss) (6,133,549) (6,133,549)
---------- ------------- --------- ------------
Comprehensive loss $ (5,904,049)
=============
Balance, July 31, 2000 $ 229,500 $ -- $ 154,745
========== ========= ============
</TABLE>
See notes to consolidated financial statements.
F-5
<PAGE>
<TABLE>
<CAPTION>
REGENT GROUP INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
Years Ended
July 31,
-------------------------------------------------
2000 1999 1998
----------- ----------- -----------
Cash flows from operating activities:
<S> <C> <C> <C>
Net loss $(6,133,549) $(1,197,511) $(1,908,775)
Loss from discontinued operations -- -- 53,595
----------- ----------- -----------
Loss from continuing operations (6,133,549) (1,197,511) (1,855,180)
Adjustments to reconcile net loss to net cash provided
from operating activities:
Depreciation and amortization 5,653,037 238,712 1,392
Non-employee non-cash compensation 492,700 25,046 1,109,552
Non-cash executive compensation -- 233,696 252,887
Cancellation of common stock previously issued in
lieu of payment of interest -- (49,219) --
Common stock issued in lieu of expenses -- 45,933 --
Marketable securities received in lieu of cash (146,000) -- --
Loss on abandonment of leasehold improvements -- -- 2,558
Changes in operating assets and liabilities 50,339 429,994 399,758
----------- ----------- -----------
Net Cash Provided by (Used in) (83,473) (273,349) (89,033)
----------- ----------- -----------
Operating Activities
Cash flows from investing activities:
Advances -- (100,000) (1,131,100)
Loans to unaffiliated entity -- (575,993) (97,898)
Acquisition of treasury stock (10) -- --
----------- ----------- -----------
Net Cash (Used in) Investing Activities (10) (675,993) (1,228,998)
----------- ----------- -----------
Cash flows from financing activities:
Proceeds from borrowings -- 1,346,765 1,183,200
Repayments on borrowings (110,000) (207,500) (157,500)
Proceeds from exercise of warrants -- -- 220,000
----------- ----------- -----------
Net Cash Provided by (Used in) (110,000) 1,139,265 1,245,700
----------- ----------- -----------
Financing Activities
Net Increase (decrease) in Cash (193,483) 189,923 (72,331)
Cash - beginning of year 194,034 4,111 76,442
----------- ----------- -----------
Cash - end of year $ 551 $ 194,034 $ 4,111
=========== =========== ===========
</TABLE>
See notes to consolidated financial statements
F-6
<PAGE>
REGENT GROUP INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Years Ended
July 31,
---------------------------------------------
2000 1999 1998
------------ ------------ ------------
<S> <C> <C> <C>
Changes in operating assets and liabilities:
(Increase) decrease in prepaid expenses and sundry receivables $ (8,593) $ -- $ 187,310
Decrease in deferred acquisition costs -- -- 119,277
Increase in accounts payable 43,768 12,694 --
Increase in accrued expenses 18,914 413,550 93,171
(Increase) decrease in deferred revenue (3,750) 3,750 --
------------ ------------ ------------
$ 50,339 $ 429,994 $ 399,758
============ ============ ============
Supplemental information:
Cash paid during the year for:
Interest $ 5,081 $ 35,562 $ 38,826
============ ============ ============
Income taxes $ -- $ -- $ --
============ ============ ============
Supplementary information of non-cash investing and and financing activities:
Common stock issued for compensation $ -- $ -- $ 2,887
============ ============ ============
Common stock issued for consulting services $ 241,830 $ 44,640 $ 721,751
============ ============ ============
Common stock issued in lieu of payment of interest $ -- $ 1,293 $ 387,801
============ ============ ============
Warrants issued in lieu of payment of consulting services $ 250,870 $ 25,046 $ --
============ ============ ============
Cancellation of common stock previously issued in
lieu of payment of expenses $ -- $ 49,219 $ --
============ ============ ============
Transfer of assets and liabilities to RH Holdings $ -- $ 1,114,950 $ --
============ ============ ============
Unrealized gain on marketable securities $ 229,500 $ -- $ --
============ ============ ============
Supplementary disclosure of non-cash investing activities:
Retirement of treasury stock $ 69,464
============
Retirement of common stock previously
issued in connection with acquisition $ 11,434,000
============
</TABLE>
See notes to consolidated financial statements
F-7
<PAGE>
REGENT GROUP INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
Regent Group, Inc. (the "Company" or "Regent"), formerly NMC Corp., is
a holding company for its subsidiary. The Company operates its business
through its subsidiary which is an internet-based advertising and
publishing entity that owns and operates several financially oriented
websites.
Recent Developments
a) On July 14, 1999, Regent acquired Stock Siren.com, LLC ("Siren"), a New
York limited liability company. Regent issued 11,550,000 shares of its
restricted common stock, comprising approximately 83.4% of its voting
shares, in exchange for all of the issued outstanding membership
interests of Siren.
In connection with the acquisition of Siren, Regent transferred its
pre-closing assets, subject to its pre-closing liabilities, to RH
Holdings, LLC ("RH"), a New York limited liability company. The Company
has accounted for the transfer in accordance with Accounting Principles
Board Opinion No. 26 "Early Extinguishment of Debt" (APB 26) resulting
in an increase to additional paid-in capital of approximately
$1,115,000. The sole member of RH is Marvin E. Greenfield. Mr.
Greenfield is a former director and former chief executive officer of
Regent and remains a principal stockholder of Regent. The consideration
which RH delivered to Regent for the pre-closing assets was to assume
all of Regent's pre-closing liabilities. In connection with this
transfer of assets and assumption of liabilities to Mr. Greenfield, the
holders of all of Regent's existing liabilities discharged Regent from
those obligations.
Siren is a wholly owned subsidiary of Regent and is its primary
operating business.
b) On September 22, 1997, the Company acquired eighty (80%) percent of the
common stock of United States Lead Testing and Removal Service, Inc.
("U.S. Lead") for $2 million. Through October 30, 1998, the Company
advanced U.S. Lead $1,231,100 toward the purchase price.
The Company rescinded the acquisition effective April 30, 1998. All
assets and liabilities of U.S. Lead as of that date were reacquired by
U.S. Lead. The Company incurred losses from U.S. Lead from the date of
acquisition through the date of rescission of approximately $1,115,000,
which is included in the statement of operations for the year ending
July 31, 1998. On October 30, 1998 the advances made to U.S. Lead by
the Company in the amount of $1,231,100, as partial payment of the
original purchase price, were converted into a convertible debenture,
which has been transferred to RH. No interest was earned on the
advances until the signing of the debenture agreement and no value was
ascribed to the warrant to convert the debt to common stock. Upon
rescission, the Company recognized a gain of approximately $1,100,000.
c) On April 3, 2000 the Company executed a merger agreement with Playa
Minerals and Energy, Inc. ("Playa"), a company engaged in the
acquisition and development of proven oil and gas reserves located
primarily in the San Juan Basin and the Gulf Coast. Currently, Playa is
developing two fields it purchased and is in the process of purchasing
two other packages of proven oil and gas reserves.
Under the terms of the agreement, Playa shareholders will receive 92%
of the equity of Regent. Current shareholders of Regent will retain 8%
of the Company and the Company will receive $265,000 in cash, of which
$200,000 has been received as of July 31, 2000, in the form of a
non-refundable deposit and recorded the deposit as income in the
Company's consolidated statement of operations for the year ended July
31, 2000. The merger is subject to due diligence by both Regent and
Playa.
F-8
<PAGE>
Basis of Presentation
The accompanying consolidated financial statements have been prepared
on a going-concern basis, which contemplates the realization of assets
and the satisfaction of liabilities in the normal course of business.
The Company has experienced recurring losses and negative cash flows
from operations through July 31, 2000. As of July 31, 2000, the
Company's current liabilities exceeded its current assets, exclusive of
the restricted marketable securities held by the Company. The Company
is liable on a note in the face amount of $90,000, due December 31,
2000, which the Company likely will be unable to pay.
During April 2000, the Company entered into a merger agreement, subject
to due diligence by both parties. The Company will receive $265,000, of
which $200,000 was received as of July 31, 2000, in the form of a
non-refundable deposit. If the Company receives the expected funds in
connection with the proposed merger, or if the Company can reasonably
liquidate restricted securities previously received by the Company in
lieu of cash compensation for services rendered, the Company believes
it will have sufficient cash to fund its operations through the
consummation of the merger with Playa, which the Company expects to
occur no later than December 31, 2000. Certain of the restricted
securities held by the Company are subject to a claim which the Company
believes has no merit.
The Company currently has no material operations or source of revenue.
The Company's web sites are not actively maintained and the Company's
only business strategy at present is to consummate the merger with
Playa. The Company received a portion of the non-refundable deposit in
connection with the proposed merger. The Company expects that it will
continue to generate insignificant revenues unless it obtains
additional equity or debt financing for the development of its web
sites, which it has no plan to pursue.
If the merger is not completed, the Company's ability to continue as a
going concern will depend upon its ability to obtain needed working
capital through additional equity and/or debt financing or to complete
a merger with another entity. There are no assurances that the
restricted securities held by the Company can be liquidated or that
such alternative financing or an alternative merger can be completed on
terms that are acceptable to the Company or at all. These uncertainties
raise substantial doubt about the ability of the Company to continue as
a going concern.
The Company is investigating the possibility of selling the websites or
Siren. The operating results of Siren have been included in the
statement of operations from the date of acquisition. Siren is
currently the Company's only operating entity.
The financial statements do not include any adjustments relating to the
recoverability and classification of recorded asset amounts or the
amounts and classifications of liabilities that might be necessary
should the Company be unable to continue as a going concern.
Principles of Consolidation
The consolidated financial statements include the accounts of the
Company and its subsidiary from the acquisition date and/or through
their respective sale or rescission dates. All significant intercompany
transactions and balances have been eliminated.
Use of Estimates
The preparation of the financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that effect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities as
of the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could
differ from those estimates.
F-9
<PAGE>
Marketable Securities
The Company classifies its investments in equity securities as
"available for sale," and accordingly reflects unrealized gains and
losses, net of deferred income taxes as a separate component of
stockholders' equity.
The fair values of marketable securities are estimated based on quoted
market prices. Realized gains or losses from the sale of marketable
securities are based on the specific identification method.
Property and Equipment
Property and equipment are stated at cost less accumulated
depreciation. Depreciation, which includes amortization of assets under
capital leases, is calculated using the straight-line and
declining-balance methods over the estimated useful lives of the
assets.
Amortization of Intangibles
Goodwill represents the excess of purchase price and related costs over
the value assigned to the net tangible assets acquired. Goodwill is
amortized on a straight-line basis over its estimated life of five (5)
years. Amortization expense was $5,653,037 and $237,320 for the years
ended July 31, 2000 and 1999, respectively. See Note 4 for further
information regarding the write-off of goodwill.
Evaluation of Long-Lived Assets
Long-lived assets are assessed for recoverability on an ongoing basis.
In evaluating the fair value and future benefits of long-lived assets,
their carrying value would be reduced by the excess, if any, of the
long-lived asset over management's estimate of the anticipated
undiscounted future net cash flows of the related long-lived asset. As
of July 31, 2000, management concluded that an impairment of goodwill
existed. See Note 4 for further information regarding the impairment of
goodwill.
Revenue Recognition
Revenue is recognized in the period in which it is earned.
Stock-Based Compensation
The Company has adopted the disclosure-only provisions of Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation". The standards encourages, but does not require,
companies to recognize compensation expense for grants of stock, stock
option and other equity instruments to employees based on fair value.
Loss Per Common Share
Basic and diluted loss per common share are computed by dividing net
loss by the weighted average number of common shares outstanding during
the year. Potential common shares used in computing diluted earnings
per share related to stock options, warrants, convertible preferred
stock and convertible debt which, if exercised would have a dilutive
effect on earnings per share. The number of potential common shares
outstanding were 1,662,868, 1,590,141 and 740,141 for the years ended
July 31, 2000, 1999 and 1998, respectively. During the three years
ended July 31, 2000 potential common shares were not used in the
computation of diluted loss per common share as their effect would be
anitdilutive.
Fair Value of Financial Instruments
For financial instruments including cash, notes receivable, prepaid
expenses and other current assets, short-term debt, accounts payable,
accrued expenses, and amounts due to officer it was assumed that the
carrying values approximated fair value because of their short-term
maturities.
F-10
<PAGE>
New Financial Accounting Standard
In June 1998, Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities" ("SFAS
No. 133"). This Statement establishes accounting reporting standards
for derivative instruments and hedging activities. It requires the
recognition of all derivatives as either assets or liabilities in the
statement of financial position and measurement of those instruments as
either assets or liabilities in the statement of financial position and
measurement of those instruments at fair value. The accounting for
changes in the fair value of a derivative is dependent upon the
intended use of the derivative. SFAS No. 133 will be effective in the
Company's first quarter in the year ending July 31, 2001, and
retroactive application is not permitted. Management does not believe
that this Statement will have a material impact on the Company.
Reclassification
Certain reclassifications have been made to prior year balances to
conform with the current year's presentation.
2. ACQUISITION
On July 14, 1999, Regent acquired Siren. Regent issued 11,550,000
shares of restricted common stock, in exchange for all the issued
outstanding membership interests of Siren. The acquisition has been
accounted for using the purchase method of accounting, and,
accordingly, the purchase price was allocated to assets purchased and
the liabilities assumed based upon the fair values at the date of
acquisition. The fair value of the assets acquired from Siren was $643
and the liabilities assumed total $ -0- resulting in goodwill of
approximately $17,324,000 which the Company expected to amortize over
five (5) years. On June 30, 2000 the former shareholders of Siren
returned 7,620,346 shares to the Company. The purchase price and the
acquired goodwill was reduced by $11,434,000. As of July 31, 2000, the
Company determined there was an impairment in the measurement of
goodwill. See Note 4 for further information regarding the impairment.
The operating results of the acquired business is included in the
consolidated statement of operations from the date of acquisition.
Pro forma unaudited operating information for the year ended July 31,
1999, of Regent and Siren assuming the business combination had
occurred at the beginning of the fiscal year is as follows:
Year Ended
July 31, 1999
-----------------
Net sales $ 3,759
Net (loss) $ (4,425,062)
Net (loss) per share $(1.52)
3. MARKETABLE SECURITIES
Gross Gross
Estimated Unrealized Unrealized
Cost Fair Value Gains Losses
---- ---------- ----- ------
July 31, 2000:
Common stock $146,000 $375,500 $229,500 $ --
======== ======== ======== =========
The marketable securities were received in lieu of cash for services
performed by the Company.
F-11
<PAGE>
4. IMPAIRMENT OF GOODWILL
On a periodic basis through July 31, 2000, the Company estimated the
future undiscounted cash flows of the business to which the goodwill
related in order to determine that the carrying value of the goodwill
had not been impaired.
As of July 31, 2000, the Company's operations through Siren had vastly
diminished. The former owners of Siren returned 7,620,346 shares,
previously issued to them, to the Company. The Company is investigating
the possibility of selling the web sites or Siren but no buyers have
been identified. The Company believes the measurement value of goodwill
has been impaired and a more realistic valuation would be the
write-down of goodwill to $-0-.
In connection with the impairment with respect to the measurement of
goodwill, approximately $5.6 million of goodwill was written off
through a charge to operations during the fourth quarter of fiscal
2000. The goodwill write-off represented a per share net loss of $.46
both on a basic and diluted basis for fiscal 2000. The change
represents a change in estimate, which is indistinguishable from a
change in accounting principle.
5. DEBT
Short-term debt is as follows:
July 31,
--------------------
2000 1999
--------- ---------
Unsecured convertible note,
due December 31, 2000 interest
at 6% per annum, payable
quarterly (1) $ 90,000 $ 200,000
========= =========
(1) The unsecured convertible note was payable to Robert Platek, a
shareholder of the Company. The Company recorded interest expense to
Mr. Platek in the amount of $5,081 and $333 for the years ended July
31, 2000 and 1999, respectively, in connection with the note. In
December 1999, the note was assigned to an unaffiliated third party. In
June 2000 the note was extended to December 31, 2000. Under the terms
of the extension agreement, the outstanding balance of the note is
convertible into shares of Regent common stock at an exercise price of
$.33 per share.
6. DISCONTINUED OPERATIONS
Effective April 30, 1998, the Company rescinded the U.S. Lead
acquisition. All assets and liabilities of U.S. Lead as of that date
were reacquired by U.S. Lead. The results of operations of U.S. Lead
have been reported separately as discontinued operations for the year
ended July 31, 1998.
7. INCOME TAX
The Company has a net operating loss ("NOL") carryforward of
approximately $9,858,000 for tax purposes expiring in the years 2003
through 2020. The Company has not reflected any benefit of such net
operating loss carryforward in the accompanying financial statements in
accordance with Financial Accounting Standards Board Statement No. 109
"Accounting for Income Taxes" (SFAS 109) as the realization of this
deferred tax benefit is not more than likely.
F-12
<PAGE>
The Tax Reform Act of 1986 provided for a limitation on the use of NOL
carryforwards, following certain ownership changes. As a result of
transactions in the Company's stock during the year ended July 31,
1999, a change in ownership of greater than 50%, as defined, has
occurred. Under such circumstances, the potential benefits from
utilization of tax carryforward may be substantially limited or reduced
on an annual basis.
There is no provision for income taxes during the years ended July 31,
1998 through July 31, 2000, as the Company had no taxable income due to
net operating losses.
A reconciliation of taxes on income at the federal statutory rate to
amounts provided is as follows:
<TABLE>
<CAPTION>
Year Ended July 31,
---------------------------------
2000 1999 1998
----------- ----------- -----------
<S> <C> <C> <C>
Tax benefit computed at the
Federal statutory rate $(2,085,000) $ (407,000) $ (648,000)
Increase in taxes resulting from:
Effect of unused tax losses 2,085,000 407,000 648,000
----------- ----------- -----------
$ - $ - $ -
=========== =========== ===========
</TABLE>
The temporary differences between the tax bases of assets and the
financial reporting amount that give rise to the deferred tax assets
and their approximate tax effect are as follows:
<TABLE>
<CAPTION>
July 31,
------------------------------------------------
2000 1999
----------------------- ---------------------------
<S> <C> <C> <C> <C>
Temporary Temporary
Difference Tax Effect Difference Tax Effect
Net operating loss
carry forward $ 9,858,000 $ 3,943,000 $ 4,577,000 $ 1,830,800
Valuation allowances (9,858,000) (3,943,000) (4,577,000) (1,830,800)
------------ ------------ ----------- -----------
$ - $ - $ - $ -
============ ============ =========== ===========
</TABLE>
8. EMPLOYMENT AGREEMENTS
Effective July 14, 1999, all employment agreements with Mr. Greenfield
and any other employee, officers, or directors of the Company were
terminated. All liabilities due to Mr. Greenfield, including the
balance of a $100,000 bonus for the year ending July 31, 1997, and
salary accruals of $250,000 and $233,700 for the years ending July 31,
1999 and 1998, respectively, have been transferred to RH.
9. CAPITAL STOCK
a) Preferred Stock
Convertible Series B preferred shares ("Series B") are
non-dividend bearing, and are convertible into shares of the
Company's common stock at any time at the option of the holder
and are subject to adjustment in accordance with certain
antidilution clauses. Cumulative Series C preferred shares
("Series C") are not convertible but are entitled to cumulative
cash dividends at the rate of $.65 per share per annum, payable
in each year commencing the year after all the shares of Series
B are retired.
F-13
<PAGE>
b) Voting Rights
The holders of Series B and Series C preferred stock have no
voting rights.
c) Dividend Restrictions
No cash dividends may be declared or paid on the Company's
common stock if, and as long as, Series B is still outstanding
or there are dividends in arrears on outstanding shares of
Series C. No dividends may be declared on Series C shares if,
and as long as, any Series B shares are outstanding.
d) Other information is summarized as follows:
Convertible Cumulative
Series B Series C
------------ ------------
Number of common shares to
be issued upon conversion
of each preferred share 10 None
Redemption price and in-
voluntary liquidation value
per preferred shares (if
redeemed, must be in series
order, Convertible Series
B then Cumulative Series C) $2.00 $10.00(1)
(1) Plus any dividend in arrears.
Because the Series B preferred stock had mandatory
redemption requirements at the time of its issuance (which
are no longer applicable), these shares are stated at
redemption value. Series B shares are stated at par value.
e) Common Stock
During the fiscal year ended July 31, 1998, 325,000 shares of
common stock were issued in lieu of consulting fees.
Consulting expense of $721,751 was charged to operations
during the year ended July 31, 1998.
On July 24, 1998, two employees of the Company were issued a
total of 1,250 shares of common stock in lieu of compensation.
This resulted in a charge to operations of $2,887 for the
fiscal year ended July 31, 1998.
During April and May 1998, 220,000 shares of common stock were
issued in exchange for warrants exercised. The Company
received $220,000.
During July 2000, 90,000 shares of common stock were issued in
lieu of consulting fees. Consulting expense of $241,830 was
charged to operations during the year ended July 31, 2000.
On June 30, 2000 the former shareholders of Siren returned to
the Company 7,620,346 shares, previously issued to them, in
connection with the acquisition. The Company reduced the
purchase price by $11,434,000. The Company retired the
returned shares.
F-14
<PAGE>
f) Treasury Stock
Effective October 8, 1999 one of the officers of the Company
resigned. The Company purchased the 1,040,541 shares
originally issued to him for a purchase price of ten ($10)
dollars. These shares were held in treasury. On November 1,
1999 the shares were canceled by the Company.
10. OPTIONS AND WARRANTS
The Company has adopted the disclosure only provisions of Statement of
Financial Accounting Standards No. 123 "Accounting for Stock-Based
Compensation" (SFAS No. 123). Accordingly, no compensation cost for
employees has been recognized for the stock options and warrants
awarded except for $131,660 for fiscal year ended 1997, which
represents the value of stock options and warrants that were granted
below fair market value at the time of the grant. Had compensation cost
for the Company's stock option plans and warrants been determined based
on the fair value at the grant date for awards in fiscal year 1997 and
1996, the Company's net loss and net loss per share would have
increased to the pro forma amounts indicated below:
Years Ended
July 31,
----------------------
2000 1999
-------- --------
Net loss - as reported $ (6,133,549) $(1,197,511)
Net loss - pro forma $ (6,133,549) $(1,204,887)
Loss per share - as reported $ (.49) $ (.41)
Loss per share - pro forma $ (.49) $ (.41)
The fair value of options and warrants are estimated on the date of
grant using the Black-Scholes option pricing model with the following
weighted average assumptions used for grants in 1999 and 1998: dividend
yield of -0-%, expected volatility of 78% to 184%, risk-free interest
rate of 5.0% and expected life of 1 year.
The granting of Company stock options is not under a formal stock
option plan.
(1) On August 19, 1996, the Company issued to BSM 50,000 shares of
common stock and warrants to purchase 220,000 shares of common
stock at an exercise price of $1.00 per share (which was below
fair market value), expiring during November 2000, in
connection with consulting services provided to the Company.
This resulted in a consulting expense in the amount of
$103,774 for the year ended July 31, 1997. BSM subsequently
assigned these warrants to various parties including 50,000
warrants to a related party. All of these warrants were
exercised during the year ending July 31, 1998.
(2) During the fiscal year ended July 31, 1999, the Company issued
warrants to purchase 650,000 shares of the Company's common
stock at exercise prices between $.33 and $1.10 per share in
connection with consulting services of $501,745 and interest
expense of $19,670 in connection with a loan agreement, which
is being amortized between twenty-four and thirty months.
F-15
<PAGE>
Information regarding the Company's stock option plans and warrants for
fiscal years ended July 31, 2000, 1999 and 1998, is as follows:
<TABLE>
<CAPTION>
July 31, 2000 July 31, 1999 July 31, 1998
----------------- ----------------- ----------------------
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
Shares Price Shares Price Shares Price
------ ------- ------ ------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Options outstanding-
beginning of year 475,000 $.46 475,000 $ .46 475,000 $ .46
Options exercised -- -- -- --
Options granted -- -- -- --
Options cancelled -- -- --
-------- ------- -------
Options outstanding-
end of year 475,000 $. 475,000 $ .46 475,000 $ .46
======== ======= ===== ======= =====
<CAPTION>
<S> <C> <C> <C>
Option price range at
end of year $.0667 to $1.00 $.0667 to $1.00 $.0667 to $1.00
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Option price range
for exercised shares -- -- --
Options available for
grant at end of year N/A N/A N/A
Warrants outstanding-
beginning of year 850,000 $ 1.15 200,000 $ 2.50 420,000 $ 1.71
Warrants exercised -- -- -- (220,000) 1.00
Warrants granted -- 650,000 .73 -- --
Warrants cancelled -- -- -- -- -- --
-------- ------- --------
Warrants outstanding-
end of year 850,000 $ 850,000 $ 1.15 200,000 $ 2.50
======== ======= ======== ======== ========
<CAPTION>
<S> <C> <C> <C>
Warrants price range at
end of year $.33 to $2.50 $.33 to $2.50 $1.00 to $2.50
Warrants price range
for exercised shares -- -- $1.00
Warrants available for
grant at end of year N/A N/A
</TABLE>
The weighted exercise price and weighted fair value of options and
warrants granted by the Company for fiscal years ended 2000, 1999 and
1998, are as follows:
<TABLE>
<CAPTION>
July 31, 2000 July 31, 1999 July 31, 1998
----------------------- ----------------------- --------------------
Weighted Weighted Weighted Weighted Weighted Weighted
Average Average Average Average Average Average
Exercise Fair Exercise Fair Exercise Fair
Price Value Price Value Price Value
-------- -------- -------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Weighted average of options
and warrants granted during
the year whose exercise price
exceeded fair market value at
the date of grant $ -- $ -- $ 1.07 $ .21 $ -- $ --
Weighted average of options
and warrants exercised
during the year whose exercise
price was less than fair market
value at the date of grant $ -- $ -- $ .33 $ 1.50 $ -- $ --
</TABLE>
F-16
<PAGE>
The following table summarizes information about fixed-price stock
options and warrants outstanding at July 31, 2000.
<TABLE>
<CAPTION>
Number Average Weighted Number Weighted
Range of Outstanding Remaining Average Exercisable Average
Exercise At July 31, Contractual Exercise At July 31, Exercise
Prices 2000 Life Price 2000 Price
-------- ---------- ---------- ------- ---------- -------
<S> <C> <C> <C> <C> <C> <C>
$.0667 - $ .33 575,000 3.64 years $ .20 575,000 $ .20
$ 1.00 - $2.50 750,000 1.96 years $1.43 750,000 $1.43
--------- ---------
1,325,000 1,325,000
========= =========
</TABLE>
11. COMMITMENTS
The Company did not lease office space as of July 31, 2000.
Rent expense under operating leases for the years ended July 31, 2000,
1999 and 1998, was $-0-, $36,150, and $36,150, respectively. The
Company subleased office space on a month-to-month basis to Mast Group
Inc. ("Mast"). The amount of sublease income was $6,000 for the years
ended July 31, 1999, and 1998. Mr. Greenfield is the President of Mast
and NBMF. The Company believes the terms of the sublease to Mast were
at least as favorable to the Company as rent which have been received
from unaffiliated third parties.
F-17
